Marketing Mix (4 Ps)CLEP Information

Products Decisions Product and Service Classification System The Product Life Cycle Introduction to product matrices Boston Matrix (Growth/Share) Ansoffs Matrix (Product Market)

Product and Service Classification System Convenience goods - little effort, relatively inexpensive Shopping goods - e.g white goods, DIY equipment, more expensive, infrequent Speciality goods - extensive search e.g Jewellery, gourmet food Unsought goods - e.g. double glazing, Industrial goods Installations - speciality goods of industrial markets - plant and machinery Accessories - maintenance and office equipment Raw materials components Business to business e.g. consultants, accountants

The life product cycle model

Development

Growth

Maturity

Decline

Few:trial of early adopters

Growing adopters: trial of product/service Entry of competitors

Growing selectivity of purchase

May be many

Saturation of users Repeat purchase reliance Fight to maintain share

Drop-off in usage Exit of some competitors

The Boston Matrix (Growth/Share Matrix) Market Share

High 1. Stars Market Growth

3. Question Mark (Problem Child)

Low

2. Cash Cows

4. Dogs

High

Low

The Boston Matrix - Chocolate Bars Market Share

High CLIFF Market Growth KIT KAT MARS BAR

Maverick Miniature Heroes

Goo Goo

Low

High

Low

Ansoffs Matrix (Product/Market Matrix)

Existing Markets

New Markets

Market Penetration

Market Development

New Products

Product Development

Diversification

Ansoffs Matrix (Product/Market Matrix)

Existing Markets

New Markets

E.g. Realignments of the marketing mix

E.g. Geographical expansion

New Products

Same outlets and sales strategy - new product

Diversification related or unrelated

Products Decisions Product and Service Classification System? The Product Life Cycle stages? Growth/Share? Product Market?

Place

Channel and Distribution Tactics Bucklins definition of distribution Todays system of exchange Channel intermediaries Six basic channel decisions Selection consideration Potential Influence Strategies - Frazier and Sheth (1989) Frequencies of use of influence strategies - Frazier and Summers (1984)

A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumptionBucklin - Theory of Distribution Channel Structure (1966)

Todays system of exchange

Promotion Contact

Users

Producers

Negotiation Transporting and storing Financing Packaging Money Goods

Channel intermediaries - Wholesalers Break down bulk buys from producers and sell small quantities to retailers Provides storage facilities reduces contact cost between producer and consumer Wholesaler takes some of the marketing responsibility e.g sales force, promotions

Channel intermediaries - Agents Mainly used in international markets Commission agent - does not take title of the goods. Secures orders. Stockist agent - hold consignment stock Control is difficult due to cultural differences Training, motivation, etc are expensive

Channel intermediaries - Retailer Much stronger personal relationship with the consumer Hold a variety of products Offer consumers credit Promote and merchandise products Price the final product Build retailer brand in the high street

Channel intermediaries - Internet Sell to a geographically disperse market Able to target and focus on specific segments Relatively low set-up costs Use of e-commerce technology (for payment, shopping software, etc) Paradigm shift in commerce and consumption

Six basic channel decisions Direct or indirect channels Single or multiple channels Length of channel Types of intermediaries Number of intermediaries at each level Which intermediaries? Avoid intrachannel conflict

Selection consideration Market segment - must know the specific segment and target customer Changes during plc - different channels are exploited at various stages of plc Producer-distributor fit - their policies, strategies and image Qualification assessment - experience and track record must be established Distributor training and support

Potential Influence StrategiesFrazier and Sheth (1989) Indirect influence strategies - information is merely exchanged with channel member personnel Direct unmediated strategies - consequences of a poor response from the market are stressed Reward and punishment strategies - given to channel members and their firms

Direct unweighted strategy or request producers wishes are communicated . No consequences are applied or mentioned Direct mediated strategies - specific action is requested and consequences of rejection are stressed e.g.1 control of retail pricing e.g.2 minimum order size e.g.3 salesperson training e.g.4 physical layout of store e.g. 5 territorial and customer restrictions

Frequencies of use of Influence Strategies

Mean use

Most frequently used 62% 13 8 4 1 0

Information exchange Requests Recommend ations Promises Threats Legalistic pleas

49% 27 19 15 10 6

Tied for Never most used frequently used 6% 8% 7 7 9 5 3 11 23 37 53 59

Frazier and Summers (1984)

Price

Pricing Decisions

Pricing strategies Pricing exercise Ten ways to increase prices without increasing price - Winkler

Pricing strategies Premium pricing Uses a high price, but gives a good product/service exchange e.g. Concorde, The Ritz Hotel

Penetration pricing offers low price to gain market share - then increases price e.g. France Telecom - to attract new corporate clients (or Telewest cable)

Economy pricing placed at no frills, low price e.g. Soups, spaghetti, beans - economy brands

Price skimming where prices are high - usually during introduction e.g new albums or films on release ultimately prices will reduce to the parity

Psychological pricing to get a customer to respond on an emotional, rather than rational basis .e.g 99p not 1.01 price point perspective

Product line pricing rationale of a product range e.g. MARS 32p, Four-pack 99p, Bite-size 1.29

Pricing variations off-peak pricing, early booking discounts,etc e.g Grundig offers a cash back incentive for expensive goods

Optional product-pricing e.g. optional extras - BMW famously underequipped

Captive product pricing products that complement others e.g Gillette razors (low price) and blades (high price)

Product-bundle pricing sellers combine several products at the same price e.g software, books, CDs.

Promotional pricing BOGOF e.g. toothpaste, soups, etc

Geographical pricing different prices for customers in different parts of the world e.g.Include shipping costs, or place onPLC

Value pricing usually during difficult economic conditions e.g. Value menus at McDonalds

Ten ways to increase prices without increasing price - Winkler Revise the discount structure Change the minimum order size Charge for delivery and special services Invoice for repairs on serviced equipment Charge for engineering, installation Charge for overtime on rushed orders Collect interest on overdue accounts Produce less of the lower margin models in the line Write penalty clauses into contracts Change the physical characteristics of the product

Promotion

Promotions Decisions Elements in the communication process Promotions mix The promotions message Executions style Media choice? Promotional objectives

Elements in the Communication Process

Sender

Encoding

Message Media

Decoding

Receiver

Noise

Feedback

Response

Sender - party sending the message Encoding - message in symbolic form Message - word, pictures and symbols that the sender transmits Media - the communication channel e.g radio Decoding - receiver assigns meaning to symbols encoded by the sender Response - reaction of the receiver after being exposed to the to the message Feedback - the part of the receivers response after being communicated to the sender Noise - unplanned static or distortion during the communication process e.g. competitor action (Creature Comforts?)

Promotions Mix Personal selling Telemarketing Direct mail Trade fairs and exhibitions Commercial television Newspapers and magazines Radio Cinema Point of sale displays Packaging

The Promotional MessageGrab Excite Create Prompt ATTENTION INTEREST DESIRE ACTION AIDA

Execution styles Slice of life Lifestyle Fantasy Mood or image Musical Personality symbol Technical expertise Scientific evidence Testimonial evidence e.g. OXO e.g. After Eight mints e.g .Turkish Delight e.g. Timotei shampoo e.g .Gap e.g. Richard Branson e.g.Vorsprung durch Technik - Audi e.g. Whiskers e.g. Ian Botham

Media choice? Marketing objectives Definition of problem e.g falling awareness Evaluation of different tools choice of optimum mix of promotional methods Integration into overall marketing communication programme

Exercise - What beliefs and expectations do you have about the following brands? How far are these due to promotion as opposed to personal experience?

Fairy liquid Persil washing powder Midland Bank Virgin Radio Nissan Tesco

Promotional objectives To support sales increases To encourage trial To create awareness To inform about a feature or benefit To remind To reassure To create an image To modify attitudes